One thing we could say about the analysts on Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Bidders are definitely seeing a different story, with the stock price of US$1.94 reflecting a 12% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
Following the latest downgrade, the four analysts covering Lexicon Pharmaceuticals provided consensus estimates of US$25m revenue in 2020, which would reflect a painful 92% decline on its sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$2.15 per share in 2020. Yet before this consensus update, the analysts had been forecasting revenues of US$39m and losses of US$2.13 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Lexicon Pharmaceuticals' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 92%, a significant reduction from annual growth of 27% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 24% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Lexicon Pharmaceuticals is expected to lag the wider industry.
The Bottom Line
Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Lexicon Pharmaceuticals' revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Lexicon Pharmaceuticals going forwards.
A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. You can learn more about our debt analysis for free on our platform here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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